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Nio - Does the Stock Charge Higher or Does It Need a Rest?

Nio has been on fire, doubling in less than 10 trading sessions. Does the stock power higher from here or does it need to rest first?

Nio  (NIO) - Get Free Report has been outright explosive over the past few weeks, although I suppose the same could be said for other electric car stocks like Nikola  (NKLA) - Get Free Report and Tesla  (TSLA) - Get Free Report.

After a volatile session on Wednesday - where shares were higher by 15.5% at one point, then down 20% from its session highs - bulls are back at again on Thursday.

The stock has gained another 10% on the day and has investors speculating whether more upside could be on the way.

From the March low to this week’s high, Nio stock is up more than 620%. The move has been incredible, and while other automakers continue to struggle, Tesla, Nikola and Nio have all surged to new all-time highs.

Can the run continue or is it out of steam?

Trading Nio Stock

Daily chart of Nio stock.

Daily chart of Nio stock.

With Thursday’s action, we’re getting what’s known as an “inside day.” That is, today’s range is completely within the range of the prior candle (Wednesday).

Different traders will extrapolate different meanings of the action, particularly with Wednesday technically serving as a reversal day after it gapped higher and failed to close in positive territory. 

It all leads to the simple question of, what now?

The $13.80 level is a key one to keep in mind. That was the prior 52-week high, which came on the third trading day after Nio’s IPO in 2018.

Below $13.80 and Wednesday’s reversal-day low is in play at $12, followed by the week’s low at $10.70.

If Nio loses $10.70 and fails to reclaim it, it could put a gap-fill back in play, down to $9.38.

As for potential upside levels, over $13.80 keeps the all-time high in play at $15.28. Above that mark and a series of extensions come into play.

Specifically, the 123.6% extension comes into play at $16.78, the 138.2% extension is at $18.62 and the 161.8% extension is up at $21.58. That’s when measuring from the all-time low to the prior highs near the IPO.

Either way, most of these upside and downside areas are just talk until we get some action. That is, seeing how Nio does with $13.80 and the eventual break of the current week’s range.